CCOC Case Summary

The condominium owner (CO) filed a complaint alleging that the condominium association (CA) did not have the legal authority to impose a special assessment for the purpose of upgrading its ventilation system and for installing a fire alarm system when adequate reserves already existed to cover these expenses. He also claimed that the CA violated Section 10B-18(b) of the Montgomery County Code by failing to give the members at least 30 days' notice of the proposed amendment to the annual budget before voting on the budget, that the CA violated the Maryland Condominium Act by failing to give at least 10 days' notice of the special meeting to vote on the budget amendment; that the CA failed to advise the members of their right to file an appeal with the Commission, and that it violated the "automatic stay" of Section 10B-9(e) of the County Code by attempting to collect the disputed assessment after the complaint was filed.

The evidence at the hearing showed that on April 10, 1991, the CA voted to impose a special assessment of $300,000 on the members for the purpose of upgrading its airconditioning system; on April 15, 1991, the CA voted to spend over $18,000 to replace its fire alarm system. The $300,000 special assessment was more than 15% of the approved 1992 annual budget but the $18,000 was less than 15%. The actual airconditioning repairs did not begin for at least 60 days after the April 10, 1991 vote. There was no imminent threat to the health or safety of the membership, and no risk of damage to the condominium, from the existing state of the airconditioning system. The CA did not give at least 10 days' notice to the membership of the special meeting to consider the replacement of the airconditioning system and did not give the membership a copy of the proposed budget amendment at least 30 days before voting on it. The CA did consider several engineering and financial reports before voting on the disputed repairs and voting to impose the special assessment. There was no evidence of bad faith or unreasonableness in the CA's decisions to perform the work. Although the Commission staff notified the CA that this dispute had been filed the CA continued to attempt to collect the disputed special assessment.

The hearing panel held that the CA violated Section 11-109.2 of the Maryland Condominium Act by failing to give at least 10 days' written notice of the special meeting to consider the proposed budget amendment. The CA violated Section 10B-18(b) of the Montgomery County Code by failing to give the members a copy of the proposed budget amendment at least 30 days before voting on it. The CA violated Section 10B-9(e) of the County Code by attempting to collect the disputed assessment after the dispute was filed. The panel further held that the CA had no duty to notify all of its members who were not involved in the dispute of their right to file an appeal of the CA decision with the Commission and therefore it did not violate Section 10B-9(d) of the County Code. The CA did not have any obligation under the Condominium Act or the County Code to notify the members of the proposed fire alarm system costs since those costs were less than 15% of the previously approved budget.

The panel further held that the CA acted within its legally-allowed "business judgment" when it imposed the $300,000 special assessment, nor did it violate its governing documents in doing so.

The panel ordered the CA to immediately cease collecting the disputed special assessment, and to schedule a special meeting for the purpose of amending the approved 1992 budget in order to fund the airconditioning repairs. It further ordered the CA to give a copy of the proposed amendment to the membership at least 30 days before the meeting, and to give at least 10 days written notice of the meeting itself.